Supporter of Ky. governor racks up mining violations

Jul. 30, 2014
|

A highwall is shown at a Justice Companies mine in Letcher County in a photo taken during an inspection. The law requires that surface mining sites be restored to their approximate original contour. / Courtesy of Kentucky Energy and Environment Cabinet

by Tom Loftus and James Bruggers, The (Louisville, Ky.) Courier-Journal

by Tom Loftus and James Bruggers, The (Louisville, Ky.) Courier-Journal

LOUISVILLE, Ky. - Coal companies owned by a major political supporter of Kentucky Gov. Steve Beshear are under serious scrutiny for failing to comply with basic strip-mining reclamation regulations in Kentucky and four other states.

The federal Office of Surface Mining Reclamation and Enforcement counts at least 266 pending violations in the five states against companies owned by West Virginia billionaire Jim Justice, who has hobnobbed with Beshear at Justice's glitzy Greenbrier Resort, and who - with his family - has contributed at least $400,000 to Beshear political causes since early 2011.

Nearly half of the unresolved violations - 129 of them - are in Kentucky, where an enforcement confrontation is coming to a head. The others are in Tennessee, West Virginia, Virginia and Alabama.

"I would say, without going back and looking at all of the records, this is the most serious set of violations that I have seen in my seven years," Kentucky Energy and Environment Cabinet Secretary Len Peters said of the environmental record of the Justice Companies.

Justice, who said Beshear is a friend, acknowledged the violations are significant. "But I do believe that every single last one of these issues will be corrected and resolved to the pleasure of the agencies," he told The Courier-Journal. "I absolutely do, without any question whatsoever."

Beshear said in a statement Wednesday that Justice's contributions have had no influence on state government actions. "The cabinet is handling the Justice Company matter in the same manner as all others of its type. The Governor's Office does not interfere," Beshear said in the statement.

And both Justice and Peters dismissed any suggestion that politics or campaign contributions in any way played into either side's handling of the matter, though state officials acknowledged they kept the governor informed.

Kentucky regulators have been so frustrated by the sluggish response to their concerns about water pollution, failing to keep pace with reclamation activities and failing to pay fines, that Department of Natural Resources Commissioner Steve Hohmann has threatened to go after company officers' own money for fines and to cover the cost of reclamations activities.

At one mine in Letcher County, for example, state officials said there is nearly half a mile of "highwall" awaiting reclamation, a cliff carved into the side of a mountain. Reclamation is supposed to occur as the mining takes place.

At other mining operations in Harlan County, regulators complained a Justice-owned company didn't have the correct equipment to reclaim 7,000 feet of highwall. That's more than a mile.

"For the past two and one half years, your company has allowed these problems to continue, languish and multiply to the point that the department is left with no recourse other than to take these actions," Hohmann wrote in a June 26 letter to Stephen Ball, a senior vice president of Southern Coal, which is a Justice company.

Civil penalties owed by Justice companies in Kentucky increased to $2 million from $1.6 million between April and June, Hohmann told Ball, adding that "the current amount of penalties is so overwhelming that it must be addressed now."

Hohmann also informed Ball that further mining by five Justice-owned companies in eastern Kentucky would be stopped, effective June 30, just four days after he wrote his letter. But the Justice Companies responded with what Peters called a plan for "taking some serious actions" and on June 29 the suspensions were delayed until Aug. 11.

It's not clear what actions were taken or promised by the Justice Companies in those four days to warrant the extension, because Cabinet officials declined to disclose them while seeking a resolution with Justice representatives.

"We're going through some pretty serious negotiations," Peters said.

"We're optimistic about it, but we can't give you the details of that" yet, Peters said, adding that "there are some actions that are expected to occur."

That's a change of position, however, from what Hohmann had told Ball in late June, that "the progress you have made is overshadowed by the number of new and continuing problems, and is not sufficient to prevent the department from taking action" on the suspensions.

"The parade of legal counsel attempting to represent your companies has done little to advance the cause of resolving these problems or getting the matters adjudicated in a timely manner," he wrote.

For his part, Justice said the immediate correction plan involves "all kinds of stuff in regard to water sampling, there's some reclamation work, there's a whole litany of stuff that the agencies want, and we have put all our people on to get this stuff caught up."

The alleged violations in Kentucky include failing to submit water monitoring reports, failing to live up to promises after previous enforcement actions, failing to pay fines and failing to meet requirements for reclaiming mined land, including eliminating highwalls.

Peters emphasized state officials have taken many actions against the Justice Companies during the last year.

"I've been signing a number of orders, with penalties associated with them," he said. "In fact I signed 10 or 15 of them this past Thursday."

In all, he said, he has signed more than 100 enforcement actions against the Justice companies since about March.

Jim Justice, his wife and two adult children emerged as major political givers in Kentucky in April 2011 when they gave $50,000 to the Kentucky Democratic Party. Later in 2011 the four Justices gave $121,600 to the Democratic National Committee at a time when the DNC was transferring large amounts to the Kentucky Democratic Party during Beshear's 2011 re-election campaign.

The four Justices gave $100,000 to the committee that paid for Beshear's 2011 inauguration festivities. And since then, the Justices have given at least $140,000 to the Kentucky Democratic Party - the most recent $40,000 contributed on June 27 - the day after Hohmann's letter suspending Justice mining permits, according to a report filed with the Federal Election Commission.

But Justice said the recent contributions were actually made much earlier in June, and that none of the contributions are intended to affect how he's treated by regulators.

Besides the contributions, Beshear was among the dignitaries Justice invited to help cut the ribbon at the 2010 opening of the casino at the Greenbrier resort in West Virginia. And, at Justice's invitation, Beshear played in the pro-am golf event at The Greenbrier Classic in 2012 (in Phil Mickelson's foursome) and in 2013 (in Bubba Watson's foursome).

Justice said he considers Beshear a friend.

"But my relationship with Steve Beshear is arm's length," he said. "I think he's a great governor. And I try to support people in this country that make a difference. It doesn't matter to me if they're Republican or Democrat."